9911796707
TMI Blog2004 (10) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further only two persons had appeared on 9-3-1999 and not all the persons whose statements have been relied upon by the Department. In view of these facts and circumstances, the Revenue cannot claim that the appellants have been given full opportunity to cross-examine the witnesses. Accordingly, the statements of these persons cannot be relied upon against the appellants. There was no evidence of any transporters and/or buyers of the appellants to show that they had received any non-duty finished goods from the appellants; there is no evidence to show there was any unaccounted cash at their premises/depot; no evidence that there was any excess stock of main raw materials for manufacture of their finished products. It is settled law that whenever the charge of clandestine removal is made, the Revenue has to prove that the assessee has procured all the raw materials required for the manufacture of final product. In the present matter Revenue has not adduced any evidence to show that the appellants had procured any raw materials in excess of the quantities mentioned in their records. This is evident from the show cause notice itself wherein it is mentioned in para 2 that the officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock of duty paid laminates were seized from their premises on the ground that the same were unaccounted for; that the Officers did not find any raw material in excess at the appellant's factory or office, nor did they find any incriminating document in their premises; that there was also no seizure of stock from any of their customers nor was mere any seizure of their finished products in transit. 2.2. He, further, mentioned that a show cause notice dated 8-9-1995 was issued to the appellants for demanding duty on the finished goods allegedly removed by them clandestinely for the period 1991-1994 and for imposition of penalty, that the allegation in the show cause notice was that Sharp Industries had cleared non-duty paid laminates to some entities known as Shyam Sunder & Sons Pvt. Ltd., Delhi Zarda, Prakash Zarda and Ramlal Shyamlal which were allegedly delivered to the appellants and those laminates were used by them to manufacture and clear Gutkha and Pan Masala without payment of duty; that these charges were made on the basis of : (i) the recovery of documents from the premises of Sharp Industries and their transporters, and (ii) the statements of the employees of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used to be issued on the same day, that the practice had been followed by them since the time Modvat was introduced and the Department was aware of the same; that Shri V.K. Singhal, Appellant No. 2, in his statement dated 2-8-1994, had explained the position to the officers. In support of the contention, the learned Advocate showed a photocopy of the R.G.23A Part-I register which showed the removal of entire quantity of laminates on the date of receipt itself. The learned Advocate also mentioned that the Department had started the investigation on the basis of excess stock of laminates on the shop floor vis-a-vis the records after the visit of the officers on 4-6-1991; that the practice of issuing the entire quantity of laminates in the records was made known to the Department and a reconciliation of the laminates with production was filed; that pursuant thereto a show cause notice was issued alleging shortage instead of excess; that the order confirming the show cause was eventually set aside by the Appellate Tribunal vide Final Order No. A/2007/96-NB, dated 31-7-1996. 3.3. He also mentioned that the Department caused investigations from transporters and made enquiries to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave not been cross-examined and as such their statements along with the statements of those who have also not been produced for cross-examination have to be ignored. He relied upon the decision in the case of Arsh Castings Pvt. Ltd. v. CCE, Chandigarh - 1996 (81) E.L.T. 276 (T) wherein it has been held that "It is an elementary principle of natural justice and fair play that a person who is sought to be proceeded against and penalised in adjudication on the basis of third party statements should be afforded effective opportunity to challenge the correctness of the same as per law by cross-examination, if he so desired. If witnesses do not turn up for cross-examination, it is open to the adjudicating authority to proceed with the adjudication without relying on these statements against the person so charged. Failure of witness to appear for cross-examination will not be a ground to penalize the appellants in law when the appellant is entitled to an opportunity of cross-examination of third party on whose statements reliance is placed". Reliance has also been placed on the decision in Emmtex Synthetics Ltd. v. Commissioner of C.Ex., New Delhi - 2003 (151) E.L.T. 170 (T) wherein it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le employees of the appellants; that mere presence of signature of their employees who were acting in concert with the employees of Sharp for ulterior motives cannot establish that all the clearances claimed by Sharp Industries were actually delivered to them; that in absence of any direct evidence or statement of any of the person who actually delivered the alleged clandestine material it cannot be alleged by the Department that the appellant received such material and used the same in the manufacture of final products which were cleared clandestinely; that though Shri Akhil Jain has identified the signature of Rajdev Maurya, he has never admitted the receipt of the material in the factory of the appellants; that in respect of one R.R. the delivery of the consignment had been taken by one Gauri Dutt, Peon of Sharp Industries Ltd., who has not been examined by the Department, that similarly Department has not recorded the statement of V.K. Jain who has signed one L.R.; that mere identification of his signature cannot be construed to be receipt of material by the appellants; that V.K. Jain left their employment on 21-7-1993 as he was caught pilfering goods in the company in connivan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n held by the Tribunal that "it is not safe to rely on the third party's evidence, when no direct link has been established between the appellants and M/s. Chemtech Industries through cash transactions or any person". (iii) Padmanabh Dyeing & Finishing Work v. CCE, Vadodara - 1997 (90) E.L.T. 343 (T) wherein it has been held that electricity consumption to work out the probable production is not by itself sufficient to assess the production. (iv) Hans Castings Pvt. Ltd. v. CCE, Kanpur - 1998 (102) E.L.T. 139 (T). 6. Countering the arguments, Shri Kumar Santosh, learned SDR, reiterated the findings as contained in the impugned Order and submitted that during the search of the factory premises of the appellants on 2-8-1994 excess stock of laminates worth Rs. 25.84 lakhs was found; that Shri V.K. Singhal, Director, was not in a position to explain the stock vis-a-vis RG23A, Part I; that he stated that he would prepare a reconciliation statement and furnish the same to the officers; that he, however, has never submitted the same; that again in his subsequent statement dated 9-8-1994, Shri V.K. Singhal could not explain the stock of laminates. He emphasized that the seizure of unac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was delivered to the appellants against cash payment. 7. The learned SDR submitted that Shri Vineet Dinesh Sharma of M/s. VIP Enterprises (Transporters), has deposed in his statement dated 2-8-1994 that materials of Tasty Gutkha and Superfit brands used to go in the name of the appellants, Ramlal Shyamlal, Shyam Sunder & Sons and Delhi Zarda; that he was informed by Shri Parab of Sharp Industries that such materials were to be delivered at the appellants premises; that Shri S.S. Parav, Partner of M/s. Bhagwati Roadways in his statements has deposed that particulars in the consignment note were filled on the basis of delivery challans, gate passes and invoices given by Sharp Industries at the time of loading of goods. He also mentioned that some of the lorry receipts show that goods were received by the employees of the appellants; that three RRs were signed by Mr. Raj Dev of the appellants; that similarly one LR of Bhagwati Roadways shows that material dispatched for Prakash Zarda was received by the appellants and another lorry receipt of Bhagwati Roadways shows that despatch of material to Shyam Sunder & Sons was received by Sharp Industries Delhi for further delivery to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis believe in the existence of the facts in issue. He contended that the Department has established its case on the basis of circumstantial evidence. Reliance has also been placed on the decision in the case of Shah Guman Mal v. State of Andhra Pradesh - 1983 (13) E.L.T. 1631 (S.C.). 8. In reply, the learned Advocate submitted that the Revenue has not established its case at all what to talk of mathematical precision; that Akhil Jain, Managing Director of the Appellant-company has nowhere in the statement dated 28-11-1994 admitted the signature of the company's employee on Lorry Receipt/Railway Receipt in the name of other firms alleged to be front companies; that Shri Jain has only stated that apparently the signature of Rajdev Maurya is the same; that no expert opinion had been obtained by the Department in this respect; that he has expressly deposed that the goods meant for Ramlal Shyamlal had not come to their factory and the appellants has no connection whatsoever with M/s. Ramlal Shyamlal, Shyam Sunder & Sons, Delhi Zarda or Prakash Zarda. 9. We have considered the submissions of both the sides. The entire case of the Revenue is that M/s. Sharp Industries Ltd., removed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an opportunity of cross-examination of third party on whose statements reliance is placed". The finding of the Commissioner that Shri Siddharth Rattan and Amit Shah had appeared on 9-3-1999 and as Advocate for appellants did not appear on that day, and as such full opportunity had been extended to the appellants for cross-examination is without any substance. The Advocate for the appellant had sought adjournment as he had to appear before the Appellate Tribunal in a number of cases. There is no rebuttal of the factual position by the Revenue. Moreover the Adjudicating Authority himself has called the witnesses again for cross-examination on 5-10-2000 which is evident from the letter dated 11-9-2000 intimating the date of personal hearing to the appellants. Further only two persons had appeared on 9-3-1999 and not all the persons whose statements have been relied upon by the Department. In view of these facts and circumstances, the Revenue cannot claim that the appellants have been given full opportunity to cross-examine the witnesses. Accordingly, the statements of these persons cannot be relied upon against the appellants. 10. The statement of Shri A.R. Patel and Shri R.K. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Advocate that neither any statement of these persons was recorded by the Department nor any opinion of the hand writing expert had been obtained in support of the contention that the signature on those receipts were the signature of the employees of the appellants. There is also substantial force in the submission of the learned Advocate that Shri Akhil Jain, Managing Director of the appellant-company, has in his statement dated 28-11-1994, only mentioned that "apparently the signature of the photocopy of the LR and that of the bill do tally" but he has never admitted the receipt of the material, that he has deposed that "but the consignment which belong to Prakash Zarda could not have come to us at all"; that he had also mentioned that the person who had signed was not known to him; that similarly Shri Akhil Jain has categorically denied that the goods meant for Ramlal Shamlal covered by RRs had come to the appellants factory. In Kothari Pouches Ltd. v. CCE, New Delhi - 2001 (135) E.L.T. 531 (T) when the Revenue relied upon the documents of transporters to prove clandestine removal of goods by the appellants without any independent corroborative evidence and no evidence was f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... co etc. Coupled with this is the fact that no excess stock of final product manufactured by the appellants was found by the visiting officers. This is evident from the show cause notice itself wherein it is mentioned in para 2 that "the officers verified the stock of finished goods however, no variation was noticed. The charge of clandestine removal of the goods has to be established by Department by adducing tangible, acceptable, cogent and convincing evidence as held by the Tribunal in the case of Emmtex Synthetics Ltd. v. CCE, New Delhi - 2003 (151) E.L.T. 170 (T). In this case the Tribunal has held that no presumption on the basis of uncorroborated, uncross-examined evidence of B.M. Gupta and the alleged entries made by him in the private diary, loose sheets/charts, packing slips could be drawn about the receipt of the polyester yarn by the appellants from the company, M/s. HPL, in a clandestine manner during the period in question. Similarly, no inference could be legally drawn against the appellants of having manufactured textured yarn out of the said polyester yarn and the clearance thereof in a clandestine manner without the payment of duty. The surmise and conjectures cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d clandestinely has been brought on record. The decision in the case of Triveni Rubber & Plastics relied upon by the learned SDR, is not applicable as facts are different. In the said matter, the officers found that a substantial quantity of tread rubber was removed from the factory without making an entry and the Managing Partner had admitted not only removing of goods without any entry but doctoring their accounts so as to show that their annual production was below the exemption limit. The appellants therein could also not explain the consumption of the electricity during the relevant period. The ratio of the judgments of the Supreme Court in the case of D. Bhoormull and Shah Guman Mal is not applicable as the Department has not succeeded in even establishing such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. The Supreme Court has held in renowned case of Oudh Sugar Milts Ltd., supra that a finding based only on inferences involving unwarranted assumptions is vitiated by an error of law. The Tribunal has also held in many decisions that it is well settled that the charge of clandestine removal has to be established by ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
